A personal dividend investing journey

Abbott 2nd Quarter 2016 results

General

On the 20th of July we received the Abbott 2nd quarter 2016 results. I like to monitor those results as it gives you a good idea of the direction the company is heading. Something I like as an investor. Therefore I write these reports for the companies I hold in my portfolio.

Results

The reported sales of Abott grew 3,2% in the 2nd quarter of 2016 compared to the same quarter in 2015. I believe this is a very good result. The nice thing is that Abott did this despite negative impact of foreign exchange rates. If you filter those out, then Abott’s sales grew with a whopping 6,4%! Total sales of Abott are now 5,3BN worldwide.

Abott consists of 4 business segments. Diagnostics, Nutrition, Medical devices and Branded generics pharmaceuticals. The nice thing is that all 4 business segments have grown. Here you can find the details:

Reported sales

Non-GAAP sales

Diagnostics

+4,1%

+6,0%

Nutrition

+1,4%

+4,3%

Medical Devices

+6,4%

+6,8%

Branded Generics Pharmaceuticals

+0,4%

+9,5%

As you can see Abott suffered from currency exchange rate headwinds since the Non-GAAP sales figures are only corrected for those. This is the case for most US based companies that export outside of the US due to the strong USD. Although I don’t expect that the USD will get back to the levels we saw a couple of years ago, I do expect that the the USD will weaken in the coming years which means that Abott can grow much faster if it has the same underlying growth figures as it has today. Therefore I am very positive about the companies future and I’m happy to be a shareholder.

Looking at the Earnings per Share, Abott grew the EPS this quarter with $ 0,40. Non-Gaap growth is $ 0,55. Abott projects its 2016 EPS under GAAP at $ 1,26 – $ 1,36. The EPS for non-Gaap is projected at $ 2,14 – $ 2,24. This is not changed compared to earlier predictions.

Business highlights

Abott reports a couple of highlights in this quarter. First, Abbott is going to acquire St. Jude Medical. According to Abbott this will create a industry leading new product pipeline across cardiovascular, neuromodulation (chronic pain), diabetes and vision care.

Abbott received FDA approval for Absorb. A fully dissolving heart stent. And for the Tecnis Symfony Intraocular lens which provides a continuous range of vision for people with cataracts.

Last, Abbott launched AlinIQ. A professional services and informatics solutions that will enable labs to deliver greater overall productivity with their existing resources.

The company is confident that those new development will help the company to achieve future growth of both sales and profits.

Dividend growth

The average dividend growth over the last five years is almost 9% for Abott. I don’t think the growth will be 9% for the coming years. Mainly because I think the growth will probably follow earnings growth in which case I expect a raise of somewhere around 5%. When currency headwinds change into a positive thing, the dividend growth can also be increased. We will see in the beginning of next year what will happen!

Conclusion

All in all the results of Abott look really good. I am happy with the performance and continue to be a shareholder. The stock itself also performed well for me since I’m roughly 15% up since I bought the stock! Also, the new devlopments sound promising although it’s hard for me to really judge that. But I trust the management in this.

What do you think of the Abbott 2nd quarter results of 2016? Do you have the company in your portfolio and are you happy with its performance? Don’t hesitate to discuss in the comments!